RJ Hamster
These Signals Are Clear—Even If the Headlines Aren’t
These Signals Are Clear – Even If the Headlines Aren’t
BY KEITH KAPLAN
CEO, TRADESMITH
The bloody fingerprint on Francisca Rojas’ bedroom door would change criminal investigations forever.
In June 1892, in the Argentine town of Necochea, two young children were found brutally murdered in their home.
Rojas, their mother, was discovered nearby with a gash across her throat.
She told police that a neighbor, Pedro Velázquez, had attacked her and killed her children after a heated argument.
There was just one problem. Velázquez had been out drinking with friends at the time of the murders. His alibi was airtight.
With the case stuck, police turned to a little-known clerk named Juan Vucetich.
For years, he’d been studying a controversial new European theory called dactyloscopy. Its proponents argued that no two people share the same fingerprints – so they could be used to match criminals to their crimes.
Investigators didn’t dust for prints in those days. That wouldn’t become routine for decades.
But Vucetich noticed something others had ignored. There was a fingerprint, left in blood, on the frame of Rojas’ bedroom door – where only the killer, leaving the room, would have touched it.
It didn’t match the neighbor. It matched Rojas.
Confronted with this evidence, she confessed that she’d killed her children and staged the attack by cutting her own throat to begin a new life with another man.
It was the first murder case in history solved using fingerprints. And it changed criminal investigations permanently. Once there was objective fingerprint evidence to follow, intuition still mattered – but it no longer had the final say.
Successful investing works the same way.
Stories are everywhere. Some are even right. But the only way to stay on the right side of big moves is to follow the evidence, not hunches, guesswork, or intuition.
So today, I’ll shine the spotlight on one my favorite evidence-based signals.
We’ll look at how it would have led you to a 243% gain on one of this year’s most explosive rallies simply by following a clear, traffic-light-style signal.
Then we’ll wrap up with some other interesting signals on deck right now.
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Silver Has Been on a Rocket Ride
The explosive rally I’m talking about was in silver.
Over the past 12 months, the iShares Silver Trust ETF (SLV)rocketed as much as 260% before plunging 35% at the end of last month.
There are lots of narratives that attempt to explain silver’s price action.
If you’ve been following what’s happening in the mainstream press or on social media, you’ve likely encountered some of them:
- The U.S. dollar is losing value versus overseas currencies.
- Investors are worried about the return of inflation.
- President Trump wants lower interest rates.
- Rising global tensions are sending investors into precious metals as a hedge against chaos.
- Spiraling federal deficits mean the dollar could collapse.
There’s nothing wrong with finding these stories interesting – I personally love reading about the world and how it works. But I don’t base my investment decisions on them.
Instead, my first port of call is TradeSmith’s Long-Term Health indicator. All I want to know is if it’s in one of three zones: Green, Yellow, or Red.
Green, Yellow, or Red?
Long-Term Health was the first indicator TradeSmith developed. And it powers our flagship risk management software, TradeStops.
It’s built around the simple observation that every asset has a normal range of movement.
Whether it’s a stock, ETF, or commodity like silver or gold, every asset develops a well-defined rhythm of ups and downs.
We measure this with a proprietary metric called the Volatility Quotient (VQ). It tells you how much a stock or other asset typically moves over long stretches of time.
You can think of this as its unique volatility “fingerprint.” A higher VQ means wider, more violent swings are the norm. A lower VQ means calmer, steadier trading.
Once we know an asset’s VQ, we can see whether today’s price action is normal or extreme by historical standards.
If it’s moving higher and remains within its usual volatility range, it’s in a Green Zone. Its bullish trend is intact, and any downside moves – however they might feel to someone holding that asset – aren’t a concern.
If it moves outside its normal volatility range, an asset enters a Red Zone. That signals that the trend has broken down, and it’s time to sell.
It’s not about whether prices are moving in one direction or another. It’s about whether they’re moving out of character.
So, what did our Long-Term Health indicator tell us about when to buy and sell silver?
243% Gains from These Traffic-Light Signals
Here’s a chart of the iShares Silver ETF (SLV) with its Long-Term Health indicator signals – those green, yellow, and red bars along the bottom.
SLV gave investors a green light in May 2023. The trend was healthy – and it was a buy. And it remained a buy or a hold until last Friday.
See that red bar on the right? It shows that SLV moved out of its normal trading range and into the Red Zone. That’s your signal to sell.
If you’d relied on this traffic-light approach – rather than trying to handicap interest rates, Fed politics, or the latest macro headline – you’d have captured a 243% gain in SLV in just under three years.
Not because you predicted anything, but because you followed the evidence.
Where does the evidence say we should focus now?
Five Stocks That Just Flash Green
Here’s a list of five large-cap stocks that have just entered their Long-Term Health Green Zone.
- AbbVie (ABBV) sells life-saving drugs that patients don’t stop taking just because the economy slows. Its cash flows are predictable, its dividends are real, and its trend remains firmly in character.
- AT&T (T) isn’t exciting – and that’s the point. Wireless bills get paid before almost anything else. That steady, utility-like demand shows up clearly in the stock’s long-term behavior.
- Mondelez (MDLZ) owns some of the most recognizable snack brands on Earth – Oreo, Cadbury, Ritz, and more. In good times or bad, people still reach for familiar comforts. The market reflects that consistency.
- Motorola Solutions (MSI) sells mission-critical communications gear to police, firefighters, and emergency services. These are long-cycle contracts tied to public safety, not consumer mood swings.
- Cencora (COR) sits deep inside the pharmaceutical supply chain, distributing drugs hospitals and pharmacies can’t operate without. It’s plumbing – invisible, essential, and remarkably resilient.
None of these companies needs rate cuts, AI hype, or economic miracles to do well. They make money doing ordinary things, day after day, in businesses that rarely surprise anyone.
That makes them great ballast in your portfolio if the AI trade runs out of steam or the economy starts to stumble.
And with the tech-filled Nasdaq 100 down nearly 4% this week – on track for one of the steepest weekly selloffs since April 2025’s Liberation Day – that’s a big plus.
More important, our system has identified them as strong candidates for gains over the coming weeks and months… no matter what the headlines say.
All the best,
Keith Kaplan
CEO, TradeSmith
